Consumer Privacy and the Future of Data-Based Innovation and Marketing

Alexander Bleier, Frankfurt School of Finance & Management, Avi Goldfarb, University of Toronto - Rotman School of Management, and Catherine E. Tucker, Massachusetts Institute of Technology (MIT) - Management Science (MS) investigate Consumer Privacy and the Future of Data-Based Innovation and Marketing.

ABSTRACT: Digitization makes it easier for firms to build their innovation and marketing efforts around consumers' personal data. In this research, we employ a privacy perspective based on contextual integrity to examine how such practices can trigger privacy concerns. We propose that small entrepreneurial firms are often at a particular disadvantage compared to large incumbent firms. At the same time, we also highlight that there are several strategies firms can use to mitigate privacy concerns and that in some circumstances, privacy concerns may also exert positive effects on data-driven marketing by stimulating privacy innovation and providing a source of competitive advantage.